This is What Reparations Could Actually Look Like in America

*This piece was originally published by Quartz.

Today’s racial wealth divide is an economic archeological marker, embedded within the multigenerational story of slavery, racial plunder, and discrimination.

It is one way the legacy of racism shows up in people’s bank accounts and, if they own a home, in home equity. It is where the past is present, where the wound at the center of US history that goes back to the destruction of indigenous communities, slavery, and Jim Crow is still open and waiting for repair. Notably, the past few decades has “supercharged” historic racial wealth inequalities.

To repair this breach, it’s becoming increasingly clear that reparations for black slavery and its legacy—including Jim Crow—must be part of the equation. Facing what activist Randall Robinson calls “the debt” to people of African descent, those of us who are low on melanin content (aka “white”) will have to address the often uncomfortable history of how lighter skin color conferred, and continues to confer, economic advantage. To do otherwise is to live a destructive lie, perpetuating a perverted myth of deservedness that holds back our entire society and each of us individually.

As Ta-Nehisi Coates wrote in his groundbreaking 2014 Atlantic article, reparations are “the price we must pay to see ourselves squarely.” “Reparations,” he continues, “beckons us to reject the intoxication of hubris and see America as it is—the work of fallible humans. An America that looks away is ignoring not just the sins of the past but the sins of the present and the certain sins of the future.”

We know from history and science that race is a social construct. And yet it continues to wield outsized societal influence. Imagine that after playing poker for an hour, we discover that we’ve been playing with a rigged deck—and that for each hand dealt, a couple of us have gotten extra cards, based on something entirely arbitrary such as the color of our eyes or sweaters. Naturally, the beneficiaries of the stacked deck have accumulated big winnings. We all heartily agree to a clean start with a new deck and fair rules.

But as the dealer begins shuffling the new deck, one of the players raises an awkward question: “What do we do about that huge pile of chips that a few of you have accumulated?”

This will not be an easy task—practically impossible in today’s political climate. Reparations must address the victims of slavery, but they must also provide opportunities for those who were perpetrators or collaborators to offer their own sort of penance. But we also need to continue talking about the possibilities—and planning for a future when reparations might become politically feasible.
To that end, practical and logistical challenges must be worked out now. I argue that the primary source of funds should be a steeply graduated tax on wealth, paid mostly by households in the top 1%—those with assets over $5 million. A tax on concentrated wealth and the resulting investments would have a positive impact on the economy for everyone, reducing the distorting impact of concentrated wealth.

The state of the racial wealth divide

While there are substantial income disparities by race, wealth in the form of property and other assets reveals more about the multi-generational roots of inequality. Assets provide a buffer against economic downturns, both personal and societal. Wealth also plays an essential role in establishing financial security and opportunity for future generations.

According to the Pew Research Center, the median wealth of white households in 2013 was a stunning 13 times greater than the median wealth of black households—up from eight times greater in 2010. White households, meanwhile, had ten times more wealth than Latino households. The average retirement savings for black and Latino households is $19,049 and $12,229, respectively, compared to $130,472 for white households.

If average black wealth grows at the same rate as it has over the last 30 years, 228 years—17 years shorter than the institution of slavery in the US—will go by before it equals the amount of wealth possessed by white households today, according to a report I co-authored with Prosperity Now, The Ever-Growing Gap. This of course presumes white wealth remains static, which it will not. It will grow.

Understanding white affirmative action

For whites to understand the racial wealth divide requires some demythologizing of our own narrative of wealth creation. In my book, Born on Third Base, I describe how wealth inequality continues to be justified by powerful myths of deservedness.

In the case of racial economic divisions, the full horror of dispossession remains difficult to grasp. In 1965, a century after the formal end of slavery, African-Americans were still largely excluded from programs that helped build middle-class wealth. In the decades following World War II, our nation made unprecedented public investments to subsidize debt-free college education and low-cost mortgages. But these wealth-building measures benefited millions of mostly white households.

People of color, meanwhile, faced overt discrimination in mortgage lending and separate-and-unequal school systems throughout the United States. Barred from traditional forms of credit, African-Americans were pushed into wealth-stripping mortgage scams like “contract for deed mortgages,” where a missed payment would lead to eviction and loss of all equity.

So while many whites were able to board an express train to middle-class wealth between 1945 and 1975, people of color were left standing at the railway station waiting for a train that never showed up. As a result of government subsidies, white homeownership rates steadily rose to as high as 75% in 2005, according to the US Census, while black rates peaked at 46% the same year, a 30-point gap that remains today.

White households were able to help their children obtain access to homeownership and stability through what sociologists call the “intergenerational transmission of advantage.” Making matters worse, white economic advantage has historically compounded over time while black disadvantage has compounded or thwarted advancement.

Historical precedent

While a politically toxic concept today, there is precedent for reparations in the US—if not on this sort of scale. In 1988, US president Ronald Reagan formally apologized for the US government’s internment of Japanese Americans during World War II and, under the provisions of the Civil Liberties Act, paid $20,000 in reparations to over 800,000 victims of internment. Over $1.1 billion was initially allocated and an additional $400,000 was appropriated later to cover claims.

There are also examples of such payout globally. In accordance with a 1952 agreement, Germany has paid over $89 billion in reparations to victims of the Holocaust during World War II. German officials continue to meet with groups of survivors and their advocates to revisit guidelines and ensure that survivors receive the benefits. As recently as 2015, both Greek and Russian parliaments voted to demand that Germany pay them for the damage inflicted by Nazi occupation.

And yet, discussions about reparations in the US tend to stall before they get started. It’s true that questions about the mechanism and source of funds are complicated. Should the focus be on slavery, or should it include the broader manifestations of white supremacy? Who qualifies? Should we allocate direct cash grants or invest in programs that can more broadly work to expand black wealth? How can reparations lead to a broader understanding and healing between collaborators and perpetrators?
While difficult, however, these questions are not insurmountable.

Who pays?

Many whites with little in the bank to show for their racial advantage will understandably be frustrated by the concept of reparations. If they never owned slaves—and neither did their ancestors—why should they have to pay? By the same token, many first- or second-generation Americans, whose European ancestors fled their own hardships to come to the US, feel miles and centuries apart from slavery.

The key point, however, is the unpaid labor of millions—and the compounding legacy of slavery, Jim Crow laws, discrimination in mortgage lending, and a race-based system of mass incarceration—created uncompensated wealth for individuals and white society as a whole. Immigrants with European heritage directly and indirectly benefited from this system of white supremacy.

It is true, of course, that many people have not shared in the economic gains equally, thanks to four decades of hyper-inequality. Today, the wealthiest 100 billionaires in the US have as much wealth as the entire African-American population combined. For this reason, I propose two concrete mechanisms to fund a national Reparations Trust Fund. The first is a graduated tax on wealth and inherited wealth. Households with wealth in excess of $5 million would pay a 1% tax, but rates would climb for billionaire households.
Secondly, I propose that the fund be capitalized in part by hefty penalties on wealthy individuals and corporations that attempt to move their funds “off-shore” or into complicated trusts to avoid taxation and accountability. There would also be stiff penalties assessed on wealth managers who aid and abet these wealth escapes by creating trusts and off-shore subsidies for the sole purposes of tax dodging.

Part of the austerity that many of our communities now face is the result of the estimated 8% of the world’s wealth that is now hidden off shore. (See Gabriel Zucman’s book Hidden Wealth of Nations: The Scourge of Tax Havens for more info.) Both a tax on wealth and stiffer penalties on tax dodging would have beneficial impacts on the larger economy for all workers, not just those who faced racial exclusion.

The road to reparations

The first step, politically speaking, would be for Congress to create a national commission. The work of such a commission would be to wrestle with the particulars of reparations and repair. Since 1989, Congressman John Conyers has repeatedly filed legislation to create this commission—HR40—but it continues to languish in committee. The number 40 in the bill’s name alludes to unfulfilled promises made to formerly enslaved Africans by the Homestead Act of the late 1800s. The act promised former slaves “40 acres and a mule.”

The commission could investigate many different forms of reparations. In his book published, The Debt: What America Owes to Blacks, Randall Robinson talks about a wide range of ways that reparations could be used, including the funding of cultural institutions, community initiatives, direct cash grants, and targeted wealth-building programs.

The commission could also determine eligibility. Scholars like William Darity will argue that eligibility should be tied to those who can demonstrate they have ancestors who suffered from forced migration and slavery, not those who came to the US voluntarily. For those who do qualify, the money could be paid in a lump sum. But that’s not the only form reparations could take shape. Some options include:

Direct stakeholder funds. These could take the form of direct cash grants without conditions to adults. Additional funds could be targeted for matching savings programs, homeownership, business start-ups, and other wealth building opportunities. Funds could be allocated to optional and free financial literacy training programs to enable people to make the most of their “stake.” (This is not out of paternalism but rather a recognition that along with unequal wealth comes the unequal knowledge of the workings of capital, saving, and investment—and that these tools can be powerful).

First-time homebuyer programs. The government could offer subsidized home mortgages similar to those that built the white middle class after World War II, but targeted to those excluded or preyed upon by predatory lending. Programs should also be available to descendants who were barred opportunities to get on family wealth creation programs.

Tuition-free higher education. Free tuition and financial support at universities and colleges for first-generation college students could be covered under reparations provisions.

Endowments for historical and cultural institutions. Reparations funds could provide one-time capital endowments to create and sustain museums and historical exhibits that teach the history of slavery and its aftermath, such as the National Museum of African American History and Culture.

National history education programs. Alongside German reparations for Nazi Germany, there has been a national investment in education about the history of the Holocaust. The “Facing History and Ourselves” curriculum is now used in thousands of US high schools. A similar investment should be made to disseminate the history of African Americans to all segments of the society.

Historical monuments and markers. Throughout Germany, there are historical markers informing people about the legacy of the Holocaust. Over 30,000 commemorative bricks have been installed outside homes and apartment buildings where Jews, gays and lesbians, Roma people, and other targets of the Nazi regime lived prior to deportation to death camps. German residents have daily reminders of this history through what are called Stolperstein: “stumbling stones.” In the US, historical markers could mark buildings such as the US Capitol (“Built with Enslaved Labor”), sites of lynchings, and organized pogroms and riots, such as the 1924 attack on a black business district in Tulsa, Oklahoma. This would be particularly important in terms of broader education and reconciliation of those who were privileged by racially discriminatory policies.

Roots journeys to Africa. Tens of thousands of Jewish young people from the US go to Israel each year, part of a “making Aliyah” pilgrimage that helps them deepen their religious and cultural identity. These birthright trips are funded by the Israeli government and private agencies in order to promote resettlement in Israel as well as to facilitate deeper ties between that country and US citizens. A similar initiative could enable people with African heritage to visit Africa, learn more about their historical roots, and deepen friendships and understanding with the African continent.
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To ignore the legacy of slavery and discrimination requires a debilitating denial on the part of whites—even those whose ancestors arrived from other lands in more recent times, and especially for those at the top of the wealth pyramid.

Science tells us “there is no such thing as race.” Yet for centuries, economic rewards have been allocated based on the level of melanin in our skin. I do not believe that we will ever be able to truly repair and heal from the material and psychological legacy of grouping people by race without an intensive process of introspection and, yes, material reparations.

*This piece was originally published by Quartz.

Chuck Collins is the coordinator of the Hidden Wealth Project at the Institute for Policy Studies. He is co-editor of Inequality.org and the author of Born on Third Base: A One Percenter Makes the Case for Tackling Inequality, Bringing Wealth Home, and Committing to the Common Good.